Making Sense Of Property Appraisals In Today's Market

Here in Pinellas County, our Property Appraiser is Pam Dubov CFA, CAE. It is the duty of the Property Appraisers Office to establish a value of a residence in order to determine the property tax assessment for each year. This can be a daunting process with the impact of distressed sales and exemptions such as Homestead, Save-Our-Home, Senior and Veterans affecting two similar homes and resulting in a possible substantial tax difference!

How a property is valued is critically governed by the Florida Statutes and the Rules and Regulations of the Florida Department of Revenue. How is Residential Property Valued? This brochure is available onlin from the property appraiser's website. To put it in simpler terms, "before assessing the value of any parcel of property, the appraiser estimates the market value. Market value is how much a property would sell for, in an open market, under normal conditions." This should knock out properties that have sold under distressed circumstance.

There are 3 approaches that are used to determine Market Value:

• Sales Comparison Approach - Similar properties' sales prices are compared, using only sales where the buyer and seller both acted without undue pressure. Usually given the greatest weight in the process.
• Cost Approach - By calculating what it would cost, using today's labor and material prices, to replace the structure with a similar one. If the structure is not new, the appraiser estimates how much it has depreciated since it was built.
• Income Approach - On rental income producing properties, by analyzing market rental occupancy rates, vacancy and collection allowances, and operating expenses to estimate what an income-producing property should earn.

It is often misunderstood that the assessed value that is used to determine the taxes represents 100% of the market value as determined by the above three approaches. In actuality, all property must be assessed as of January 1st each year at 100% of market value less the cost of the sale. The cost of the sale would include any closing costs, including doc stamps, intangible tax, title insurance, fees and commissions.

When a property changes owners during a sales transaction, the tax amount can also change depending on whether certain exemptions are given up or added. The Title Agency doing the title search normally contacts the property appraiser's office to determine the appropriate tax assessment in order to prorate the taxes on the closing statement. You can reach the Property Appraiser's office directly at http://www.pcpao.org/